New ICMS model on fuels should be delayed, says sector

Despite an ultimatum from the Minister of the Federal Supreme Court (STF) André Mendonça, the new model for collecting taxes on fuels should not come into force at the beginning of 2023, as provided for by a law passed by Congress, assesses the fuel sector.

In order for the deadline to be met, the regulation of the charge must be completed by September 30, since tax changes can only be applied 90 days after their regulation.

“We know it will be difficult”, said this Tuesday (27) the director of Downstream of the IBP (Brazilian Institute of Oil and Gas), Valéria Lima. The group, which brings together companies in the sector, has been talking to state finance secretariats to help develop the new model.

The change in the tax was approved by Congress in March and provides for the ICMS on gasoline and diesel to change from a percentage rate to a fixed amount in reais per liter. All states must charge the same amount.

The project’s approval generated a legal dispute between states and the federal government with the former alleging billion-dollar losses and the risk of rising prices in states that have lower tax rates, such as São Paulo.

The states even tried a maneuver, establishing a maximum rate and allowing each government to adopt discounts, so that the rates were equivalent to those before the law.

In June, Mendonça set a deadline for the new rule to be regulated. In September, at the request of the states, it extended the deadline for another 30 days.

While the finance secretariats questioned the change, the government passed a law in Congress limiting the ICMS tax rate on gasoline to 18%, which brought down the price of fuel at the pumps. Diesel also had a limited tax, but the rate was already lower in most states.

The unification of ICMS is an old plea in the fuel sector, which argues that the simplification of taxation on fuels reduces the scope for fraud and improves the country’s competitiveness.

In a plenary session at Rio Oil & Gas this Tuesday, representatives of the sector once again defended freedom of prices, with the monitoring of international quotations, as the only alternative to guarantee supply and guarantee investments in increasing supply.

The president of Vibra (ex-BR), André Natal, even showed a study concluding that, even with different approaches to price over the last few years, Brazilian consumers ended up paying, on average, prices in line with international prices.

In his opinion, therefore, it would be better for prices to vary daily, in small percentages, to reduce consumer noise and avoid market disorganization. “[Tentar segurar preços] It made no difference, but in many ways we disorganized the sector and the agents,” he said.